monnet ispat & energy limited (miel) discussion/proposal submitted by the prospective investors...
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Monnet Ispat & Energy Limited (MIEL)
Investors Brief
January, 2017
1 Strictly Private & Confidential
Monnet Ispat & Energy Ltd - Brief Overview
Strictly Private & Confidential
~1.5 MMTPA* Integrated Steel Plant (ISP) at Raigarh based on blast
furnace / sponge iron route along with pellet and sinter facilities.
Coal-based sponge iron producer with total DRI capacity of 0.8 MMTPA at
Raipur (0.3 MMTPA) & Raigarh (0.5 MMTPA).
Captive Power capacity - 230 MW.
Interests in Coal & Iron Ore Mining & Coal Beneficiation business; Owned
Washery Capacity of 7.5 MMTPA.
Allocated Gare Palma IV/7 non-coking coal mine (Extractable coal of 56
MMT).
Iron & Steel & Captive power capacity at Raipur & Raigarh
*Million Metric Tonnes Per Annum 2
Presence/ Milestones
Strictly Private & Confidential 3
(Rs In Crores)
Historical Financial Position
Revenue reduced in FY16 by 43% over FY15 on account of lower aggregate utilization (30%) of facilities due to subdued global demand and dumping of steel in India.
Increase in Interest (~173%) & Depreciation (~100%) in FY15 due to capitalisation of ISP & washery; Interest expense has increased further (~43%) in FY16 due to additional term loan of Rs 800 Crs along with accrued interest on overdue, increase in interest on ECB facilities.
Exceptional item of Rs 253 crs in FY15 is royalty for coal extracted from Milupara captive mine to GoI.
Decrease in net worth due to losses incurred of ~796 Crs in FY15 & ~1684 Crs in FY16.
Description FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 H1
Net Sales 1897 1957 2268 3186 1823 722
EBIDTA 538 547 475 199 -343 -53
Interest & Financial Charges 87 119 239 653 940 540
Exceptional Items - - - 253 90 9
PAT 289 250 70 -796 -1684 -768
Net Worth 2360 2730 2840 2018 815
Long Term Loans (Secured + Unsecured)
2963 4333 5863 6339 6672
Net Block (including CWIP) 3819 5854 7271 7524 6838
EBIDTA Margin 28% 28% 21% 6% -18% -7%
Strictly Private & Confidential 4
Shareholding (As On March 31, 2016)
Strictly Private & Confidential
*Consortium lenders together hold 51.00% equity shares after including L&T Infrastructure (classified
under body corporate having ~0.90% holding). Lender wise equity share provided at Annexure -I
# Category Of Shareholder # Of shares Shareholding (%)
(A) Shareholding of Promoter and Promoter Group
1. Bodies Corporate I - Udhyam Merchandise Pvt Ltd 251,23,675 12.51%
II - Umra Securities Ltd 187,50,000 9.34%
III - Others 5,58,550 0.28%
2 Individuals / HUF/ Others 63,00,616 3.14%
Sub Total (A) 507,32,841 25.27%
(B) Public Shareholding
1. Institutions
I Foreign Institutional Investors 128,82,741 6.42%
II Mutual Funds / UTI 38,110 0.02%
III Financial Institutions 7,45,241 0.37%
IV Consortium Lenders* 1006,30,183 50.12%
2. Non-Institutions
I Bodies Corporate 234,57,139 11.68%
II Individuals 122,81,987 6.12%
Sub Total (B) 1500,35,401 74.73%
Total (A)+(B) 2007,68,242 100.00%
5
Stock Performance
Strictly Private & Confidential
Price History Data – NSE (January 2016 – January 2017)
Share Price Data (As on 3rd Jan’17) BSE NSE
Share Price 24.05 23.90
52 week High 38.90 35.10
52 week Low 19.25 19.25
6
Facilities at Raipur
Strictly Private & Confidential 7
Facility
Capacity (TPA) &
Configuration
Technology and
Make
Date of Start of Commercial
Production
Current Status/
Balance Economic Life
300,000 TPA
Sponge Iron
• 2 X 350 TPD & 2 X
100 TPD kiln.
Coal Based DRI
Make: Jindal Indigenous
Tech.
Kiln 1- 05.08.1994; Kiln 2- 25.12.2001
Kiln 3- 19.08.2003; Kiln 4- 01.01.2004
Operational ;
Avg balance life ~6 (+15
yrs*)
46,400 TPA
Ferro Alloys
• 2 X 7.5 MVA; 5
MVA; 9MVA.
• Mainly Si- Mn.
Open Top SAF
Make: Indigenous JSPL,
Sushma Associates
SAF 1-20.12.2000; SAF 2- 24.09.2003 SAF 3- 24.09.2003; SAF 4- 08.08.2004
Operational ;
Avg balance life ~14 (+15
yrs*)
233,200 TPA
Steel
Melting
Shop
• 2 X 8T, 2 X 12T & 1
X 18T IF.
• One Billet/ Bloom
Caster
Induction Furnace
Make: ABB IF and
Inductotherm
IF 4- 29.03.1995; IF 5- 30.08.2002 IF 1- 07.11.2003; IF 2- 07.11.2003
IF 3- 07.11.2003
Operational;
Avg balance life ~14 (+15
yrs*)
Caster Life: 20 Yrs
150,000 TPA
Rolling Mill
• Products - ISMB,
ISMC, ISA, RSJ.
Z – Type configuration Make: AS Precision
15.02.2007 Operational ;
Avg balance life ~18 yrs
60 MW
Power
• 37.5 MW; 15.0
MW; 7.5 MW
WHRB & AFBC
Make: Alstom, BHEL
and Triveni
20.12.2000 15.12.2003 01.02.2007
Operational ;
Avg balance life ~31 yrs
*Additional Economic Life of 15 years with maintenance capex
Facilities at Raigarh
8
Facility Technology / Configuration
And Make
Date of Start of Commercial
Production
Current Status/
Balance Economic Life
200,000 TPA
Pellet Plant
• Straight grate process
• Make: Jacobs Engg Inc/ Aker Solution, METSO, Outotec, Rotoauto, Enrich
March 2015
Operational
Avg balance life ~25 yrs
500,000 TPA
Sponge Iron
• 2 X 100 TPD & 4 X 350 TPD kiln
• Coal Based DRI
• Make: Jindal Indigenous Technology
Kiln 1- 28.03.2006; Kiln 2- 28.03.2006 Kiln 3- 29.03.2007; Kiln 4- 29.12.2008 Kiln 5- 28.03.2006; Kiln 6- 29.03.2006
Operational
Avg balance life ~13 (+15 *)
625,000 TPA
Blast Furnace
• Make: Sinosteel, China 01.10.2012
Operational
Avg balance life of ~24 yrs
1,610,000 TPA
Steel
Melting
Shop
• 2 X 100 TPA Electric Arc Furnaces
• 3 X 100 TPA Ladle Refining Furnace
• One Slab Caster + Billet Caster
• Make: Prowess, Danieli
SMS 1- Sept’13
SMS 2- Sept’13
Operational
Avg balance life of ~24 yrs
Billet Caster Life: 24 Yrs
Slab Caster Life: 20 Yrs
Rolling Mill
• Plate Mill & Rebar Mill
• Make: ABB, NCO, Holtec, Danieli,
September 2013
Operational
Avg balance life of ~19 yrs
170 MW Power • 2 X 45 MW + 1 X 80 MW
• Make: BHEL
2005 & 2009 Operational
Avg balance life of ~35 yrs
Strictly Private & Confidential
*Additional Economic Life of 15 years with maintenance capex
Beneficiation Facilities
8 Strictly Private & Confidential
*Additional Economic Life of 15 years with maintenance capex
Washery Location Capacity Date of Commercial
Production Consultant
MIEL Owned
Angul (Talcher) 5.0 MMTPA December 2014 Engineers League
Incorporation
Raigarh 2.5 MMTPA December 2014 Bentech
Operational Performance
Raipur
Strictly Private & Confidential
• Steel facilities at Raipur operated at ~40% based on demand of structural product.
• Sponge Iron at Raigarh lower for FY16 due to deteriorating viability vis a vis cost of production.
• Raigarh ISP commissioned in FY14, Production currently in ramp-up stage based on industry demand.
• Utilizations lower owing weak demand & economics for industry.
Raigarh
95% 94% 92%
46%
31%
50% 47%
31%
51%
FY 2014 FY 2015 FY 2016
Sponge Iron Liquid Steel Billet Bloom
98%
69% 64%
9% 24%
9% 14%
38%
15%
FY 2014 FY 2015 FY 2016
Sponge Iron Liquid Steel Billet/ Bloom
10
Investments Allocation
Strictly Private & Confidential
Investment Asset/ Project Stake Present Status
Monnet Power &
Company Ltd
1050 MW coal
based power
plant
87.5%
(Rs 701 Cr*)
• Lenders have initiated change in management
proposal for MPCL and EoI have been
received from the interested bidders;
• Return on investment made by MIEL shall be
negligible. (Detailed as per Annexure IV)
Orissa Sponge Iron
and Steel Limited
Iron ore mine
with DRI plant
in Odisha
35.17%
(Rs 293 Cr*)
• Mineable reserve ~122 MMT (Avg Fe ~63-
64%).
• Critical clearances received for development
of mine. (Detailed as per Annexure III)
Monnet Global Ltd Stake in
Indonesian coal
mine
100%
(Rs 21 Cr*)
• MIEL to sell stake in MGL as per CAP
• Pending due to slow down in market
* Investment as per ABS dated 31.03.2016
11
Mines Allocated
Strictly Private & Confidential
Block Name Gare Palma IV/7 Coal Mine Hahaladdi Iron Ore Mine
Location Mand Raigarh Coalfield in Chhattisgarh Hahaladdi village, Bhanupratappur,
Chhattisgarh
Mine Type Open Cast Open Cast
Mining Area ~420 Ha (incl. 5.098 Ha of forest area) 78.90 Ha
Extractable Reserve 56.62 MMT (Phase I: 31.05 MMT in first
30 years); Phase II: 25.57 MMT)
12.05 MT (including 11.49 MT insitu ore
and 0.55 MT float ore)
Annual Extraction
Capacity
1.20 Million metric tonnes per annum 0.5 Million tonnes per annum
Associated
Infrastructure
200 TPH of Coal Handling Plant Capacity
& 0.96 MMTPA of coal washery
Newly allocated mine, infrastructure to
be developed.
Distance from Plant ~55 Kilometres ~45 Kilometres
Royalty Rs 2619 per tonne As per applicable laws
• In addition, Company also has investments in limestone mine.
• Five mines (under development) had been allotted to MIEL / its JV companies and cancelled later by the
Hon’ble supreme court of India. (Details as per Annexure VI)
12
Debt Obligations (As on March 2016)
Lender wise outstanding as on reference date provided at Annexure-II.
Rs In Crores
Strictly Private & Confidential
• SDR invoked by lenders on 22nd August 2015. Interest is not serviced by Company since invocation and part of
interest/debt obligations (Rs 350 crore ) converted into equity under SDR.
• EPBG invoked by Cargill on account of non-performance under APSA and converted EPBG into RTL.
• ECB of USD 53 Mn by ICICI Bank, converted into RTL facility & balance ECB by Axis Bank & ICICI Bank in various
stages of approval for conversion into RTL facilities.
Facilities Principal O/S Interest O/S Total
Rupee Loans for ISP 1661.5 56.5 1718.0
Additional 800 Cr Loan 683.5 70.2 753.7
Other Rupee Loans 732.3 42.3 774.7
Non-Convertible Debentures 920 67.6 987.6
Sub Total (A) 3997.4 236.6 4233.9
ECB Converted to RTL 355.8 - 355.8
Outstanding ECB 1386.7 55.9 1442.6
Export Performance Bank Guarantee 829.2 - 829.2
Sub Total (B) 2571.7 55.9 2627.6
Unsecured Loan 297.7 3.1 300.8
Fund Based WC Limits 1411.0 - 1411.0
Non- Fund Based WC Limits 504.5 - 504.6
Sub Total (C ) 2213.3 3.1 2216.4
Total (A+B+C) 8782.4 295.5 9077.9
13
Stake sale
Strictly Private & Confidential
• Lenders have acquired controlling stake (~51%) in MIEL through conversion of debt (~Rs. 350 Cr.) into
equity under SDR provisions of RBI.
• At least 26% shareholding of MIEL held by Lenders proposed to be divested
• Transaction proposed by way of bidding process. Debt on balance sheet of MIEL may be refinanced based
on discussion/proposal submitted by the prospective investors
Offer details
Name of the Company : Monnet Ispat & Energy Ltd.
Face Value : Rs. 10.00
Effective equity stake : At least 26%
Seller : Consortium of Lenders led by State Bank of Patiala (SBoP)
14
Offer Highlights
Strictly Private & Confidential 15
Company Specific Advantages
• Investment into operational ISP (expected to save ~5-7 years of project construction and stabilising time)
• Washery facilities of 7.5 MMTPA (Raigarh & Angul) for captive usage as well as sale on merchant basis.
• Strategic stake in iron ore mining capacity of OSIL(122 MT reserves); Mining lease to be executed by Jan-17.
• Allocated Gare Palma 1V/ 7 non-coking coal mine in Mand coalfields (Extractable reserves of 56.62 MMT).
• Well established distribution network coupled with a dedicated chain of dealers, throughout India.
Location Advantage
• Facilities located close to iron & coal bearing-areas (Improves access to raw material/ reduces logistics cost)
• Well connected road & infrastructure network for all facilities
Design Advantages
• Efficient system design ; Based on design capacity/ current input-mix plant has capacity to produce 1.50
MMTPA of finished steel + surplus 0.45 MMTPA of billets/ rounds and 0.35 MMTPA of pellets
Regulatory Support
• GOI has allowed & extended Minimum import price ( MIP)/ safeguard duty to support the Steel Industry
Proposed Investment
Investor to take at least 26% stake; funds so infused to be utilised towards:
(a) Improving the capital structure (b) Improving business profile of company (c) Ramping up production
Thank You
16
Annexure I – Pro-Rata equity allotted to Lenders
# Bank/Institution Equity Participation (Rs. Crore) % Share
1 State Bank of Patiala 46.13 6.72%
2 State Bank of India 24.12 3.51%
3 State Bank of Mysore 9.91 1.44%
4 State Bank of Hyderabad 10.57 1.54%
5 State Bank of Bikaner & Jaipur 20.37 2.97%
6 Punjab National Bank 17.86 2.60%
7 Indian Overseas Bank 17.40 2.53%
8 Oriental Bank of Commerce. 15.43 2.25%
9 Indian Bank 10.33 1.50%
10 Vijaya Bank 6.84 1.00%
11 Dena Bank 13.80 2.01%
12 UCO Bank 15.39 2.24%
13 United Bank of India 12.41 1.81%
14 Union Bank of India 14.86 2.16%
15 Corporation Bank 5.24 0.76%
16 Jammu & Kashmir Bank Ltd. 4.68 0.68%
17 Central Bank of India 3.74 0.54%
18 Allahabad Bank 1.17 0.17%
19 Syndicate Bank 6.22 0.91%
20 Bank of Maharashtra 9.32 1.36%
21 Andhra Bank 0.70 0.10%
22 ICICI Bank Ltd. 18.74 2.73%
23 Axis Bank 5.50 0.80%
24 Exim Bank 3.71 0.54%
25 IDBI Bank Ltd 31.60 4.60%
26 L&T Infrastructure Finance Company Limited 6.15 0.90%
27 IFCI Limited 11.69 1.70%
28 A P S R T C Employees Provident Fund Trust 6.30 0.92%
Total 350.18 51.00% 17
Annexure II – Lender–wise outstanding (As On Aug 22, 2015)
Rs In Crores
Bank/Financial Institution RTL NCD ECB WC - FB
Limit WC – NFB
Limit One
Time BG EPBG
Total Limits
State Bank of Patiala 80.11 10.00 - 490.00 185.00 123.46 98.00 986.57
State Bank of India 3.97 - - 312.00 120.00 80.00 - 515.97
State Bank of Mysore 20.54 - - 84.78 27.78 - 100.00 233.10
State Bank of Bikaner & Jaipur 222.75 - - 130.00 50.00 32.92 - 435.67
Punjab National Bank 200.22 - - 130.00 31.24 20.58 - 382.04
IDBI 107.00 45.00 199.50 153.00 71.33 - 100.00 675.83
State Bank of Travancore 4.37 - - - - - - 4.37
UCO Bank 329.17 - - - - - - 329.17
Syndicate Bank 18.24 25.00 89.78 - - - - 133.02
State Bank of Hyderabad 136.00 5.00 - - - - 85.00 226.00
Oriental bank of Commerce 245.07 15.00 - - - - 70.00 330.07
Dena Bank 324.67 - - - - - - 324.67
Corporation bank 112.00 - - - - - - 112.00
United Bank of India 265.47 - - - - - - 265.47
Indian overseas Bank 117.12 50.00 - - - - 205.00 372.12
Bank of India 105.00 25.00 47.88 - - - 75.00 252.88
Indian bank 114.02 - 41.90 - - - 65.00 220.92
Strictly Private & Confidential 18
Annexure II – Lender–wise break-up (As On Aug 22, 2015)
Rs I n Crores Bank/Financial Institution RTL NCD ECB
WC - FB Limit
WC – NFB Limit
One Time BG
EPBG Total
Limits
Vijaya bank 146.34 - - - - - - 146.34
Bank of Maharastra 189.40 10.00 - - - - - 199.40
Union Bank of India 216.16 - 101.75 - - - - 317.91
ICICI 55.00 - 345.80 - - - - 400.80
EXIM Bank 7.44 - 71.82 - - - - 79.26
Axis Bank 10.00 - 107.73 - - - - 117.73
LIC of India - 220.00 - - - - 220.00
Jammu & kashmir bank - 100.00 - - - - 100.00
Central Bank of India - 80.00 - - - - 80.00
Allahabad bank - 25.00 - - - - 25.00
Canara Bank - 25.00 199.50 - - - - 224.50
Andhra Bank - 15.00 - - - - 15.00
Bank of Baroda - 15.00 282.63 - - - - 297.63
APSRTC - 5.00 - - - - 5.00
IFCI - 250.00 - - - - 250.00
DBS - - 149.63 - - - - 149.63
Afrasia bank Ltd. - - 29.93 - - - - 29.93
SCB - - 106.40 - - - - 106.40
Deutsche 112.50 - - - - - - 112.50
L & T 131.53 131.53
Total 3410.07 920.00 1774.25 1299.78 485.35 256.96 798.00 8,944.41
Strictly Private & Confidential 19
Annexure III – Orissa Sponge Limited
Strictly Private & Confidential
MIEL has non current investment of `293 Crs for 35.17% stake in Orissa Sponge Iron and Steel Limited
(OSIL) which was incorporated in Orissa on April 9, 1979. It was promoted by Torsteel Research
Foundation in India (TRFI) and Investment Corporation of Orissa Limited (IPICOL).
The plant of OSIL is situated in Keonjhar Disctrict and is spread over 552.3 acres of land of which 70
acres is freehold and balance is on 90 years lease. OSIL has sponge iron manufacturing capacity of
250,000 TPA, billet making capacity of 100,000 TPA and captive power capacity of 36 MW. OSIL’s plant
is closed since FY14. OSISL has dues of around Rs 435 Crores towards FIs/Banks & Statutory dues.
OSIL was allocated Iron Ore mines at Malangtoli with reserves of 153 million tons. Mine Ensures ready
availability of iron ore for a period of ~15 years at low cost.
Status of mine:
• As per the new MMRDA act, terminal date for securing mining lease is January- 17.
• Mining Lease pending on account of Stage II Forest Clearance; Same shall be followed by (a)
Execution of ML (b) Permission from IBM for commencement of mining (c) Reserve / Cushion
Period.
• Mine can be operational in a period of 9-12 months from the date of grant of mining lease.
20
Annexure IV: Monnet Power Company Ltd
Background MIEL signed a MoU on 26th Sep 2006 with Government of Odisha for setting up the plant
Fuel Sources Aggregate coal required to operate at 85% PLF: 4.7 MTPA
Mandakini ‘A’ coal block allocated , in JV with Jindal India Thermal Power Ltd. (JITPL share 73%, MPCL share 27%). JV filed plea in Delhi HC against proposed capping of fixed charges by GoI; Matter is now sub-judice.
Off-take Executed 2 PPAs with PTC India aggregating to 665 MW (gross) & 600 MW (net) 350 MW on long term basis @ Rs. 3.17/kwh starting year tariff back-to-back arrangement with WBSEDCL* 200 MW on short term basis
GRIDCO: 12% of power (i.e., 126 MW) from the project @ variable cost
Water Requirement: 3,772 m3/hr, Source: Brahmani (~24 kms from the project site)
Power Evacuation
PGCIL to provide transmission capacity of 400 MW for evacuation of power to West Bengal
PGCIL setting up a pooling station at Angul to cater different IPPs – 31 km from project site; MPCL constructing dedicated 400 kV D/C transmission lines from 400 kV plant switchyard to 765 kV PGCIL Angul substation.
Present Status Account presently NPA, IDFC lead bank . Change in mangement process has been initiated by Lenders in MPCL and EoI for the same has been received from the interested bidders
MIEL stake in MPCL is proposed to be transferred to New Investor at notional value
Monnet Power Company Limited (MPCL)
Monnet Ispat & Energy Limited (MIEL) Blackstone FP Capital Partners (Mauritius) V Limited
1050 MW (2 X 525 MW) coal based thermal power plant in Odisha (Project)
Strictly Private & Confidential
12%
88%
21
Annexure V: Process Flow
Strictly Private & Confidential 22
Annexure VI – Investment in Mine
Strictly Private & Confidential
Particulars Expenditure on Fixed Assets
Investment in Shares
Other Current & Non Current Assets
Total
MIEL
Utkal - B2 40.79 - - 40.79
Rajgamar 13.96 - - 13.96
JVs
Mandakini - 39.30 3.00 42.30
Urthan North - 5.75 0.09 5.84
Morga – 3 - 0.98 5.56 6.54
54.75 46.03 8.65 109.43
23
As per ABS dated 31.03.2016
(Rs In Crores)